Digitisation essential for powering Africa’s financial development

By Mel Frykberg Time of article published Mar 22, 2019

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JOHANNESBURG – Digitisation has the greatest potential to influence trade and productivity in Africa, according to the head of the United Nations Economic Commission for Africa (ECA).

Adam Elhiraika made the comments during debate at a conference of African ministers of finance, planning and economic development in Marrakech, Morocco.

He pointed to examples from Rwanda and South Africa, using evidence from the soon-to-be-launched 2019 Economic Report on Africa.

While Rwanda has increased its tax collection by a commendable six percent of GDP thanks to digital strategies, South Africa has reduced the cost of revenue collection for both the state and taxpayers by 20 percent by going virtual with the process, the report says.

Elhiraika said Africa should expect to see further success stories as more countries convert to digital methods which make it easier to access hitherto hard-to-tax domains such as agriculture, the informal sector and the digital economy itself.

According to the ECA, the possibilities for increasing state revenue with the use of new technologies are real, with delegates from Guinea reporting that 19 percent of their compatriots already use mobile money solutions in their regular and business transactions.

Experts however said there was a need for systems to protect users of technological platforms from hackers; urging African countries to create regulatory and surveillance frameworks for cybersecurity.

The leader of the Moroccan team of experts at the session, Elbakkouri Aziz, said policies on the digital economy should be practical and citizen-centred.

His team said African countries should form a common front to deal with adequately taxing multinationals, including the use of digital strategies.

Senegal offered some experience on revenue collection from the informal sector.

“Local councils are best placed to tap revenue from the informal sector, and should be drafted in to do so” said Mayacine Camara, mayor of Koungheul in Senegal, whose council has made progress in that regard.

Ambassador Raj Busgeeth of Mauritius said his country had made much progress on digital tax collection, with performance enhanced by incentives to citizens who pay their tax online.

Digitalisation would however only be optimal for resource mobilisation by stamping out corruption, he said, adding that people in positions of power should be closely followed up to pay taxes.

African News Agency (ANA)

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